Council delays decision on using tax money to acquire building for USOC

The City Council on Tuesday delayed a decision on whether to spend an additional $1.9 million in taxpayer money as part of an incentives package to keep the U.S. Olympic Committee in Colorado Springs.

The council will take up the matter at 1 p.m. Feb. 17 when it meets as the Colorado Springs Utilities Board.

Tuesday’s delay was prompted by council members’ questions over Utilities’ former gas-operations building in southwest downtown, which plays a key role in a revised city-USOC agreement the two parties approved last year.

Under terms of that deal, the city borrowed more than $32 million to buy the top five floors of a new downtown office building at 27 S. Tejon St. The city will lease the space to the USOC for a nominal annual fee, and the sports group will move its offices this year from its Boulder Street campus. The USOC eventually will own the office space, under the agreement.

But no money was left to finance city government’s $4.4 million, five-year purchase of Utilities’ gas-operations building, which is being remodeled into offices for the USOC’s national governing bodies as part of the deal. The city will also lease that building to the USOC, which will later assume ownership.

To complete the city’s purchase of the gas-operations building, city staffers took a funding proposal to council members Tuesday that recommended tapping $1.9 million in general-fund reserves. That money would be used to make the first two annual installments of the $4.4 million cost of buying the building.

Not so fast, some council members said.

Mayor Lionel Rivera and Councilman Scott Hente said they opposed using general fund reserves and wanted to explore options.

The city had a separate deal in place to sell an unrelated building on the northeast side of town to Utilities for $1.2 million, Rivera said. Proceeds from that sale should be used to reduce the city’s $4.4 million cost of buying the gas operations building, he added.

Hente said different uses had been identified for the gas operations building as far back as 2002 — five years before the USOC deal.

“I’ve always said I wanted some alternative other than the city having to write a check,” Hente said of the purchase of the building. “I made that comment back in 2003 or 2004.”

Other questions surfaced about the history of the gas operations building. Bill Cherrier, Utilities’ chief financial officer, said after the meeting that he didn’t know when it was constructed or how it was financed.

If tax-exempt bonds were issued to pay for its construction, Utilities needs to research whether the debt has been paid, Cherrier said. If not, Internal Revenue Service restrictions on tax-exempt financing might limit the building’s use for a private purpose, such as the USOC project, he said.

“We don’t believe there’s potentially an issue, but it needs to be fully vetted and researched before we can confirm that.”

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